'Bumpy' road ahead for Year 2 of Obamacare, says official

Wendy Gonzalez sits with an insurance agent in Miami as she purchases a health insurance policy under the Affordable Care Act on March 20, 2014.
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Obamacare 2.0 is clearly still a work in progress.

A top federal health official told Congress on Thursday that the upcoming open enrollment in Obamacare will have some "bumps," and "won't be perfect" as work continues on HealthCare.gov and related systems. So far, about $840 million has been spent on the project.

"It's a bumpy process at times," said Andy Slavitt, principal deputy of the Centers for Medicare and Medicaid Services, the agency that runs HealthCare.gov, the federal Obamacare insurance marketplace.

"There will certainly be bumps," Slavitt told members of the House Oversight and Investigations Subcommittee, which among other things is looking into why HealthCare.gov flopped as badly as it did last year when it launched for Obamacare's first enrollment period.

Slavitt, a former UnitedHealth Group executive who has been in his new job for only three weeks, also said, "We are keenly aware of the challenges of Year Two in a new program of this scale, particularly one that faced significant challenges in its first year."

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Obamacare's second enrollment season opens Nov. 15. Slavitt said that yet to be fully built is a back-end system, case-management tools to help customers with complex eligibility situations and an online exchange for selling health insurance to small businesses and their workers.

Slavitt's testimony came a day after the release of a scathing Government Accountability Office report that said a lack of "effective planning," lax oversight of contractors, a rushed schedule and changing requirements all contributed to last year's initial failure of HealthCare.gov.

CMS "launched HealthCare.gov without verification that it met performance requirements," William Woods, the GAO's director of acquisition and sourcing management, said in the report.

The software architecture of HealthCare.gov, which sells Obamacare insurance plans in 36 states, performed so badly in his first two months of operation that it was unable to enroll significant numbers of people in health coverage.

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Only an intensive repair effort led to HealthCare.gov being able to sign up a total of about 8 million people by the close of open enrollment in April.

Rep. Fred Upton, the Michigan Republican who chairs the Energy and Commerce Committee, in prepared remarks before Slavitt's testimony said, "Yesterday we learned that the price tag for HealthCare.gov is approaching $1 billion. We also learned that the administration's poor management led to significant cost increases and an exchange that—now 10 months after launch—is still not complete."

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"We have held many hearings at this subcommittee and were told on numerous occasions by administration officials that implementation was on track, Americans could keep their health plans, premiums would not skyrocket, access to doctors would be secured, and employees would not suffer. These promises have fallen woefully short," Upton said. "The second open-enrollment period is now less than four months away. The administration has fallen silent on providing updates to the American people about the status of implementation."

By CNBC's Dan Mangan